Schott Solar has just opened a factory at a time when market demand is soft and some of its biggest competitors are keeping prices low and going beyond manufacturing to generate revenues.

Gerald Fine, CEO of Schott North America, says he knows the challenges well and is watching closely how other solar panel makers like First Solar and Suntech Power are making a strong bid into the power project development business in the United States.

Tempe, Ariz.-based First Solar, in particular, has claimed to be able produce panels more cheaply than anyone else, and has kept panel prices especially low to gain a greater share of the U.S. market.

"We recognize that we may have to provide value-added services in the longer term," said Fine when asked about the company's interest in developing power projects. "First Solar is a great company. As pricing of First Solar panels comes down, it puts pressure on all of us."

For now, however, Schott is focusing on selling solar equipment rather than building or even operating solar power plants, he said. The company held a ceremony Monday to dedicate its $100 million, 200,000-square-foot factory in Albuquerque, N.M.

The manufacturing complex has the capacity to produce 85 megawatts worth of solar panels, as well as specially coated steel tubes for building parabolic trough power plants that use curved mirrors to focus the sunlight to heat fluid inside the tubes and generate steam for power production.

The factory would enable the company to better serve the U.S. market, which is expected to grow significantly thanks to federal and state tax incentives, rebates and grants to promote renewable power generation (see Obama Signs Stimulus Package). But Schott would also ship products from this factory to wherever market demand is overseas, Fine said.

The factory had in fact began shipping the steel tubes, which are encased in glass and called receivers, and solar panels since April, Fine said. The receivers have gone to undisclosed U.S. customers. Most of the 225-watt panels are heading to oversea markets such as Europe while those panels achieve safety certification by the Underwriters Laboratories for the U.S. market. Schott expects to receive the certification this summer, Fine said.

It would take roughly 12 months to reach the 85-megawatt-per-year production rate for the panel production, he added.

Like other solar equipment makers, Schott hopes to see the market demand perk up in the second half of this year, when the federal government should be set to distribute grants and loans from the stimulus package approved by Congress in February this year.

"We feel pretty comfortable with our order book in second half of 2009 and 2010," said Fine, who declined to discuss customers who are buying products from the new factory.

Germany-based Schott Solar already has factories in Germany, the Czech Republic and Spain. It also has a factory near Boston where it produces silicon wafers, processes them into solar cells and then assembles the cells into panels. Schott Solar called off attempts to go public last fall because the global financial markets were crumbling  (see Schott Solar Shoots Down IPO). Schott Solar is a wholly owned subsidiary of Schott Group, whose North American division is Schott North America.

Schott also has a joint venture with Wacker Chemie, called Wacker Schott Solar, that was formed in 2007 to produce silicon wafers. Germany-based Wacker Chemie produces silicon as well as chemical products for construction, life science electronics and other industries.

Schott Solar's strategy in expanding its U.S. manufacturing base isn't unique. Another Germany-based company, SolarWorld, opened its 150-megawatt solar cell factory in Oregon last fall, and plans to increase production to 500 megawatts per year by 2011 (see Q&A: Will U.S. Become a Solar World?). Sanyo announced last October that it would build a silicon ingot and wafer factory in Salem, Oregon.

Suntech Power in China on Monday said it plans to build its first solar panel factory in the United States and expects to decide on a location within six month. 

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